Tip-Sharing Rule Blocked in Government Spending Law

Stephen Miller, CEBS By Stephen Miller, CEBS March 23, 2018
Tip-Sharing Rule Blocked in Government Spending Law

This story has been updated

A measure that will prohibit employers from requiring workers to turn over their tips to management was approved by Congress and signed into law by President Donald Trump on March 23.

The provision is a small part of a mammoth omnibus spending bill to fund the federal government. The Department of Labor (DOL) last December had proposed allowing employers the option of requiring workers who receive tips to share that money with non-tipped colleagues, overturning an Obama-era prohibition on the practice. But the rule also would have, controversially, allowed organizations to require that workers turn over their tips to management.

Highlights from media coverage of this latest development in the tip-sharing controversy below. 

Law Strikes a Compromise

Both sides in the tipping wars are claiming victory: worker advocates, who see the provision as a bipartisan rebuke to a proposed Labor Department rule last year that could have legalized a practice now considered wage theft under the law, and the National Restaurant Association, which had been pushing to rescind a 2011 regulation that prohibited tip pooling for back-of-the-house employees in all circumstances. The new law allows wait staff to share tips with all hourly workers, whether front or back of the house. The Restaurant Law Center issued a statement that said "We are also pleased that the illegal 2011 rule enacted by the previous Administration is being eliminated by this legislation…."
(Washington Post)

Labor Advocates See Further Gains

Now that parts of the tip-sharing proposal have been stopped, the next fight for labor organizations is raising wages for tipped workers, said Saru Jayaraman, co-founder and president of Restaurant Opportunities Centers (ROC) United.

"The next step is that we need one fair wage—the elimination of the lower wage for tipped workers so that this incredibly large workforce, the majority of whom are women, is not entirely dependent on customer tips to feed their families," she said. "When this omnibus bill passes, it will represent an enormous step toward that final victory."


[SHRM members-only toolkit: Complying with U.S. Wage and Hour Laws and Wage Payment Laws]

Restaurant Owners Sought Flexibility

Business owners welcomed the changes clarifying that back-of-the-house staff could be included in the tip pool. In their view, the restaurant experience is created by the combined efforts of the front and back of the house, and tip-sharing allows cooks and other crew to be rewarded for good service.

Implementing and managing a legally compliant tip pool, however, may not be simple, and requires distinguishing tips from service charges, among other considerations.
(SHRM Online)


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